Question: You are enrolling in an MBA program. To pay your tuition, you can either take out a standard student loan (so the interest payments are

You are enrolling in an MBA program. To pay your tuition,

You are enrolling in an MBA program. To pay your tuition, you can either take out a standard student loan (so the interest payments are not tax deductible) that has an EAR of 5% or you can use a tax-deductible home equity loan with an APR (monthly compounding) of 5.875%. You anticipate being in a very low tax bracket, so your tax rate will be only 15%. Which loan should you use? The after-tax rates for the two loans are: Percent Compare Standard loan rate: %. (Round to three decimal places.) %. (Round to three decimal places.) Home equity loan rate: Enter your answer in the edit fields and then click Check Answer. ? part remaining Clear All Check

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